China 2013 Total Bean Production Estimate: Part Three
The third installment of IFT’s China bean production overview from industry analyst Dr. Randall Fairman reporting from China.
By Dr. Randall Fairman
This article is the last in a three part series on the China dry bean industry.
- China Dry Bean Production Overview
- China 2012 Dry Bean Crop Economic Analysis
- China 2013 Total Bean Production Estimate
Over the past year, Fairman International Business Consulting has had the privilege of serving several people from the international dry bean industry. It has been our privilege to travel with foreign professionals in the dry bean industry and visit many farmers, processors and exporters in various regions of China. Our analysis is 100% based on publicly available information from the China customs database and our personal observations as we traveled with industry professionals. This report is simply a compilation of our observations over this past year.
Historical Production Totals and Production Trends
China exports nearly all of the kidney beans it produces. Figure 1 shows China’s bean exports over the past 15 years. It is clear that over the past 15 years there has been a significant increase in kidney bean production and exports, but there isn’t a noticeable trend over the past 5 years. One major goal of this article is to provide a reasoned estimate of what this graph might look like next year, after the 2013 exports have been completed.
Figure 1 – China Dry Bean Export History
Conventional wisdom and trends in 2013
In early spring 2013 we visited the major bean growing regions and spoke with processors and farmers about their 2013 planting intentions. In our spring planting intentions report we found throughout all bean growing regions that planting intentions were quite high due to the elevated prices at the time of planting. Our conclusion at that time was that 2013 planted area was going to be at an all-time high. Mung beans had large leftover stocks in the warehouses, so we anticipated a higher percentage of kidney beans for the 2013 crop.
In summer 2013 we followed up with a brief survey of actual planting and found that the majority of farmers had followed through on their planting intentions. With a little bit of good weather we fully anticipated a record year for China kidney bean exports.
In the latter half of the 2013 growing season, HeiLongJiang Province, which is the primary growing region for kidney beans, experienced excessive rains and ultimately flooding. The initial reports about these weather impacts were quite grave and the general consensus seemed to be that the 2013 kidney bean crop would suffer significant losses. We heard of losses ranging from 30 to 60% due to the adverse weather conditions. As we traveled the region with industry professionals, we did see that the weather would have an impact, but we estimated it would be on the low end of the estimates we heard.
2013 Production Estimates
Upper Northeast Production Region
Based on planting intentions in the upper northeast region, we had anticipated a significant increase in overall production. It appears that the adverse weather patterns of 2013 will offset the increased planted area and this region will produce about the same quantity of beans that it produced in 2012.
Central Production Region
The central production region experienced good weather patterns and saw an increase in planted area in 2013. This region is very strong in Dark Red Kidney beans and so production of this variety is likely to be higher than normal this year. Because this region accounts for only 10% of China’s total bean production, it will not significantly impact total production, but it will make a significant impact on Dark Red Kidney bean production.
Figure 2 – China Dry Bean Production Regions
Our 2013 export estimates are shown in Figure 3:
- Chinese Kidney beans and all other beans in the HS071333 tariff code will be exported at their five-year average due to increased planting and poor weather.
- Mung bean exports are estimated to be 30% below the five-year average due to decreased planting and poor weather. Actual production numbers are expected to be significantly less than this, but there was a lot of carryover stock from last year.
- Adzuki beans are estimated to be 15% below the five-year average as a result of average planting and poor weather.
Figure 3 – 2013 China Dry Bean Export Projections
2013 Bean Variety Production Numbers
Black beans had a small reduction in total planted area in 2013 and the weather had a fairly significant impact on their production. Total production in 2013 is around 20% less than 2012 production.
Yunnan province total production of large white kidney beans remains unchanged. The varieties of white beans grown in the Northeast (including Japanese white beans) fell sharply and the overall reduction is estimated at 40% due to a combination of reduced planting and poor weather.
Specialty kidney beans
- The 2013 planting area for dark red kidney beans was above average, with normal weather conditions across all planted areas. Total 2013 production is approximately 15% higher than 2012 production.
- Purple speckled kidney beans are up around 35% despite poor weather thanks to a sharp increase in planted area.
- Long light speckled kidney beans are up around 15% despite poor weather thanks to increased planted area.
- Round light speckled kidney beans are down around 15% because of poor weather.
- Cranberry beans, grown primarily in XinJiang, saw 2013 production increase about 10% over 2012 production due to increased planted area and good weather.
Figure 4 shows the trends in China dry bean export prices over the past 15 years compared with the FAO Cereals Index over the same time period. At current prices, dry beans are an attractive option for the Chinese farmer. As high grain prices worldwide continue to draw farmers from the west into corn production, it seems that kidney bean prices may continue to increase. In the short term, it seems rational that China may continue to be a preferential location for bean production because of the relatively high labor requirements. As China’s standard of living and labor costs reach parity with the west, it seems likely that we will see a shift toward more domestically consumed agricultural products.
Figure 4 China Dry Bean Export Price Trends
In the very near term, there are a number of competing factors that will determine planting for 2014:
- Many Chinese farmers planted more beans this year based on anticipated prices. Due to adverse weather, they harvested less than they thought they would. Some of the other crops such as soybeans were less affected by the adverse weather and so they performed better. This experience may steer many farmers away from kidney beans in 2014.
- Kidney bean prices in 2013 have been very high and farmers are rapidly selling their crop. Even though many planted less area in 2013, they still made a good profit overall. If prices continue high through March 2014, it seems likely that farmers will again plant kidney beans extensively.
- In the regions where beans are grown, the government will offer a minimum price guarantee for farmers who plant corn in order to minimize the risk to the farmer. This policy for corn was instituted in 2008 and it can be seen in figure 5 that the minimum price guarantee has thus far been keeping up with the increased export prices for kidney beans. The minimum guaranteed price for corn at time for planting compared with the higher risk estimates for kidney beans will affect farmers’ planting decisions.
Figure 5 – 5 Year China Dry Bean Price Trends
Check back in April of 2014 for our planting intentions report!